"Clearly, at a time when we're making difficult decisions at home over public spending, it would be quite wrong - it is quite wrong - for there to be proposals for this increased extra spending in the EU."

A Downing Street statement after the meeting said Mr Cameron had stressed the importance of the UK keeping its budget rebate, worth 3.5bn euros in 2011.

The statement called the rebate "fully justified". The EU Commission and some EU governments want the rebate scrapped.

Mr Cameron has warned he may use his veto if other EU countries call for any rise in EU spending. The Netherlands and Sweden back his call for a freeze in spending, allowing for inflation.

Poland and its former-communist neighbours, which rely heavily on EU cash, want current spending maintained or raised.

Possible outcomes

A deal after intense negotiations which may continue into the weekend

Failure to agree and a follow-up budget summit

If no agreement is reached by the end of 2013, the 2013 budget ceilings will be rolled over into 2014 with a 2% inflation adjustment, amid uncertainty over long-term EU projects